BAE in charm offensive to staff over merger plan

The management of the defence giant BAE Systems has so far met with 600 UK staff face-to-face to persuade them of the merits of its proposed £30bn merger with Airbus-owner EADS.

Ian King, chief executive, is holding a series of town hall meetings to reassure employees that the tie-up, which would create a European champion capable of taking on the US's Boeing, would create more work in the UK in the future.

Critics of the deal have argued that British staff could be most vulnerable in any future jobs culls because of the more stringent labour laws in France and Germany, where so many of Airbus's workers are based. However, BAE has struggled on its own, having been forced to cut 20,000 jobs, many of which were in Britain, over the past five years.

Yesterday afternoon Mr King held a call with more than 60 of BAE's top managers to run through how the merger will work. The board have been stressing how the merged group will have €18bn of cash on its balance sheet, allowing for expansion in lucrative markets such as Asia and the Middle East.

Under takeover rules, BAE and EADS have until 10 October, 28 working days after news of their talks leaked, to agree terms. However, they can request an extension, which might be necessary as German, British, French and Spanish governments look to safeguard their national interests.

The deal will see BAE shareholders own 40 per cent of the combined group, with the balance taken by EADS investors. The governments would be given golden shares so that they could veto any future hostile takeover, but EADS's chief executive,Tom Enders, is keen to rid the company of existing state influence, which includes the right to nominate board members.

Mr Enders is the favourite to lead the new group, which will be listed in London and Amsterdam.